Warner Bros Discovery Spurns Bid, Stands by Netflix Merger

The Warner Bros Discovery board of directors has formally rejected a US$108.4 billion hostile takeover bid from Paramount Skydance, stating that the proposal fails to provide adequate financing assurances and lacks the creditworthiness of the existing merger agreement with Netflix. This decision reinforces the binding US$82.7 billion deal previously reached with the streaming corporation.

According to a regulatory filing and reporting by Reuters, the board issued a letter to shareholders on Dec. 17, 2025, characterizing the Paramount Skydance offer as “illusory.” The board questioned the validity of the bidder’s claimed financial backstop, noting that the equity commitment relies on the Lawrence J. Ellison Revocable Trust, a vehicle whose assets and liabilities are not publicly disclosed.

"A revocable trust is no replacement for a secured commitment by a controlling shareholder," Warner Bros Discovery said. "The Ellison family has chosen not to backstop the PSKY offer, despite having been told repeatedly by WBD how important a full and unconditional financing commitment from the Ellison family was."

The board said the proposal led by David Ellison, CEO of Skydance, presents significant execution and financing risks. By contrast, it reaffirmed its support for the merger agreement with Netflix, led by co-CEOs Greg Peters and Ted Sarandos, describing it as a fully binding transaction supported by firm debt commitments that do not require additional equity financing.

Strategic Context and Valuation Differences

The dispute follows the announcement of a definitive agreement under which Netflix would acquire Warner Bros. Discovery’s film and television studios, as well as HBO and HBO Max. The transaction is contingent on Warner Bros. Discovery spinning off its linear networks business into a separate entity, Discovery Global.

Paramount Skydance submitted six bids to acquire Warner Bros. Discovery in its entirety, including linear networks such as CNN and TNT Sports. Its final hostile offer proposed US$30 per share in cash, a premium to Netflix’s US$27.75-per-share offer, which consists of US$23.25 in cash and US$4.50 in Netflix stock.

The board emphasized Netflix’s scale and financial strength, noting its market capitalization of approximately US$412 billion and its investment-grade balance sheet. By comparison, Paramount has a market value of about US$15 billion and a credit rating just one notch above speculative grade.

Operational Risks and Regulatory Outlook

The board also highlighted structural risks in the Paramount Skydance financing, which depends on a seven-party, cross-conditional arrangement. Under the proposal, the Ellison Revocable Trust would supply only 32% of the required equity while capping its liability at US$2.8 billion. The board noted that assets held in a revocable trust can be withdrawn at any time.

In addition to financing concerns, the board cited restrictive operating conditions embedded in the Paramount Skydance proposal, including limits on new content licensing agreements during the period between signing and closing. It also described the plan to generate US$9 billion in synergies as aggressive, warning that it would likely trigger another round of job cuts that could further strain the industry.

"The Warner Bros Discovery Board reinforced that Netflix merger agreement is superior and that our acquisition is in the best interest of stockholders," says Sarandos.

Netflix is currently engaged with the US Department of Justice and the European Commission as part of the regulatory review process. While Paramount Skydance has argued that its offer provides greater regulatory certainty and immediate liquidity, Warner Bros. Discovery maintains that the Netflix transaction represents the more secure path forward.

Following the announcement, Warner Bros Discovery shares fell 1.4% to US$28.50 in premarket trading. Netflix shares rose 1.5%, while Paramount shares declined 1.8%. Warner Bros. Discovery has not yet set a date for a shareholder vote, though chairman Samuel Piazza said it is expected in spring or early summer 2026.